These companies could be poised to start paying dividends, Morgan Stanley says

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Nutanix Inc News

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Companies that announce the start of a dividend payment tend to outperform in the months that follow, the Wall Street firm found.

The Federal Reserve's move to start cutting interest rates bodes well for dividend-paying stocks, and Morgan Stanley thinks several companies are poised to join their ranks. Central bank policymakers last week cut interest rates by a half point, lowering the benchmark federal funds rate to a range of 4.75% to 5.00%. The Fed's shift in policy will result in lower yields for Treasurys and other bonds, which can make dividend-paying stocks even more attractive for income-seeking investors.

The company has a current free cash flow yield of 4.1%, the investment bank found. Wall Street also recommends the stocks, with 82% of the analysts covering Nutanix rating it a buy or strong buy, according to LSEG. Consensus price targets suggest nearly 20% upside from current levels. Piper Sandler analyst James Fish rates Nutanix overweight. His price target of $77 implies nearly 27% upside from Tuesday's close.

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